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Wellness Discount Programs Strike a Sour Note in Reform

There is widespread opposition to a provision in the Senate reform bill that would allow employers to increase the insurance discounts they provide to workers who meet certain "wellness" targets, while penalizing those who don't. Although the vast majority of such programs involve weight loss or smoking cessation, nearly any healthcare condition could qualify.

Since 2006, HIPAA regulations have allowed employers to sponsor wellness discount programs that set targets for, say, employees' body mass index (BMI), and to provide insurance discounts of up to 20 percent for those who meet the goal. The Senate provision would let employers raise that discount to as high as 50 percent of the insurance premium. Opponents charge that self-insured companies will raise workers' share of insurance costs, piling the cost of the discounts on the backs of overweight people or others who may be likely to use healthcare because of their conditions. Even under current law, they note, insurance discounts can be financed by imposing penalties on those who don't meet wellness goals.

The increase in premium costs for employees singled out by these programs and their families could be substantial, according to a paper issued by a coalition that includes the American Cancer Society, the American Diabetes Association, the American Heart Association, and the American Stroke Association. Under current regulations, companies can vary premiums up to $2,675 a year, based on today's average cost of coverage. If the incentives and penalties in wellness programs rose to 30 percent, that amount would grow to $4,013; at the 50 percent level, a penalized employee's family plan would cost $6,688 more than those of his or her coworkers. Of course, that includes the employer's share; but still, even if the employee is paying only 25 percent, it's a lot of money. In some cases, it might discourage people who have chronic diseases from accepting insurance.

Some observers view the Senate provision as a backdoor way of circumventing the prohibition on insurance companies basing premiums on each person's health status. "Insurers can spot profits a mile away, and this is a loophole they will drive right through on day one," Andrew Kurz, the former chief financial officer of Wisconsin Blue Cross Blue Shield, told reporters recently. While it seems as though employers would have a more direct motive to create such a scheme, there is little doubt that some insurers who administrate health plans for employers will suggest it to them and perhaps even set up their wellness discount programs.

I know that many of you think that people who "don't take care of themselves" should pay more for health care. But it's not always so easy for obese folks to deal with their condition. In some cases, it may be genetic or glandular. And even if their employer offers a weight-loss program, they might not be able to join it because of family obligations or a second job. The National Partnership for Women and Families points out that the Senate provision would especially penalize women, who are more likely than men to suffer from chronic conditions. "Women want to make healthy lifestyle choices for themselves and their families, yet in practice they often neglect their own health because they put the needs of their children, spouses and aging relatives before their own," the Partnership notes in an issue brief.

It's hard to think of any reason why such a regressive provision would be in reform legislation ostensibly aimed at improving access to healthcare. Congressional negotiators would be wise to ditch the Senate version and keep that of the House, which would merely study the potential of wellness programs to improve health behavior and raise the use of preventive care.